Markets have begun to look past the peak of the pandemic and towards when economic functioning can normalise. And readers of my analyses know that as the more headroom we put above 2900, the more nervous I have become about the outlook, but the more risk rallied this week (headscratcher).

And while I did not dare take on the Fed since March (staying long SPX), but perhaps I am just predisposed to looking for bad news as we start reopenings as the economic hard data reality check awaits.

And judging by the conversations I had with colleagues, everyone is feeling the same way, and this rally in stocks must be one of the most hated of recent times.

Despite the animal spirits spurred on by incredulous policy support, it is worth noting a word of caution here as hedge funds are lining up to smack the sell in May go away trade. Assuming the standard seasonal pattern will hold that is.

But if you want to stay invested, you are better off switching from long SPX into long Asia FX high yield to earn some carry while we go nowhere for six months and short VIX to make sure you don’t miss the next stop on the rally bus if STONKS move higher over the summer.

I love that view for no reason than herd immunity remains elusive. And even with a therapeutic regime looking more probable, it is not going to be made available to the masses until January or possibly longer despite the White House putting as many resources to work as they did on the Manhattan Project.

But so far, the market has been able to avoid the pain trade as shorts abound, but with cash 38% of the market cap, there’s the potential purchasing power of $ 2 trillion sitting sidelined. if CTAs take another run at 3000, it could be lights out for the hordes of Wall Street bears.

So, my view still cuts two ways as the cone of uncertain clouds the outlook above SPX 2900

International markets analysis and insights from Stephen Innes, Chief Global Market Strategist at AxiCorp